Morris Manning & Martin, LLP

Life Insurance Premiums and Outside Basis: The Untold Story


MMM partner Matt Wochok examines whether a partner is required to reduce the basis in his interest in a partnership when the partnership, named as a beneficiary under the contract, makes premium payments on a life insurance contract. This article provides a broad overview of insurance contracts and the applicable federal income tax rules, summarizes historic court decisions and administrative rulings applicable to basis calculation in life insurance contracts, applies the concepts discussed to partnerships and analyzes the effect of premium payments on a partner’s basis in his interest in a partnership, and discusses potentially conflicting views.

Read more here, in this Viewpoint, August 15, 2022, Edition of Tax Notes. Membership required.